Enterprise Systems
This chapter explores enterprise systems and ERP systems (defined below) and discusses the advantages which can accrue from these types of integrated systems (as well as, though to a lesser extent, the cons). Several business processes are described in terms of an integrated enterprise system, and several SAP examples are given.
Components of Enterprise Systems:
Enterprise Resource Planning (ERP) - a business system that integrates all aspects of the business, including planning, marketing, sales, and manufacturing. The main point of an ERP is to unify the entire process to a single database in order for all users to be accessing the same information. By the way, does anyone know why these integrated enterprise systems have such an undescriptive name? Click here for a list of vendors that provide ERP software.
Third party add-ons:
Customer Relationship Management (CRM)software builds and maintains an organization's customer-related data, which is collected from multiple customer interactions, such as Web, call centers, field sales, and service calls. The data is aggregated, managed, and coordinated across the organization to support identification, acquisition, and retention of customers and to maximize the benefits of those relationships. Ex: account set-up on Amazon.com
Customer Self-service (CSS)software, often an extension of CRM software, allows an organization's customers to complete an inquiry or perform a task without the aid of an organization's employees.
Sales Force Automation (SFA)software is another extension of CRM software that automates sales tasks such as order processing and tracking.
Supply Chain Management (SCM)software helps plan and execute the steps in an organization's supply chain including demand planning; acquiring inventory; and manufacturing, distributing, and selling the product.
Product Lifecycle Management (PLM)software manages product data during a product's life, beginning with the design of the product, continuing through manufacture, and culminating in the disposal of the product at the end of its life. PLM software integrates data across many units of an organization, such as engineering, logistics, and marketing, and data from partner organizations, such as vendors, contract manufacturers, and distributors.
Enterprise Systems Value Chain:
Value Chain
Primary Activities
Support Activities
Organization Value System
Upstream Flows
Downstream Flows
Event Based Data Capture:
Who - the individual or organizations - the agent
What - exchange - the resources
Where - events take place, where agents are located, where resources reside - the locations
When - the time period, could be present or future
Basic Database Terminology:
Characters - letters and numbers that comprise an attribute
Field - any cell or location to enter a value or attribute in a table
Record - a complete row of cells or fields in a table (aka entity/event instance)
Table - a collection of like rows or records
Database - a set of tables (;could be hundreds or thousands of tables)
ERP Modules:
(What does SAP call modules today, lets update the terminology); Check out other ERP vendor modules also. Five core modules in a typical ERP are below. Each implements one or more business processes.
Sales and Distribution - implements functions related to a sale to a customer
Order Entry process - entering a customer order, checking credit, determining availability
Shipment process - picking goods, packing goods, recording a shipment
Billing process - scheduling sale for billing, creating invoices
Materials Management - implements functions related to procurement and inventory management
Purchase Order process - receiving a purchase requisition, requesting quotations (RFQs) from vendors, creating of a purchase order, sending purchase order to vendor
Goods Receipt process - comparing received and ordered quantities, increasing quantity-on-hand counts
Vendor Invoice Receipt process - entering of vendor invoice, 3 way matching between purchase order, receipt and invoice.
Financial Accounting - implements general ledger and financial accounting reports as well as Accounts/Receivable and Accounts/Payable management. The FA module also creates the Trial Balance, Balance Sheet, Income Statement and Statement of Cash Flows.
Controlling and Profitability Analysis - implements all managerial and internal accounting reports. The CO module performs profitability analyses, ABC and budgeting.
Human Resources - implements the functions related to recruitment, benefits, training, travel and payroll.
ES/ERP Pros:
ES:
-Single Database
-Integrated System
-Process orientation
-Standarization of business processes
-Faster business process,real time
-Timely information
-Improved financial management
-Improved productivity
-Better financial disclosure
-Improved budgeting, forecasting and decision management
-Seamless integration
-Catalyst for change, business process reengineering
ERP:
-One package
-Modular structure
-Little or no development
-Configurable
-Reduced errors
ES/ERP Cons:
ES:
-Centralized control vs. decentralized empowerment
-Inability to support traditional business processes that may be best practices for that organization
-Loss of flexibility in rapidly adapting to desired new business processes in the post-implementation period
-Increased complexity of maintaining security, control, and access permissions for specific information embedded in central database.
The rigidity of "standardization" can impede creative thinking related to ongoing business process improvements
ERP:
-Complex & inflexible
-Implementation horror stories
-Best practices are shared by all who buy
-Difficult to configure
-Long implementation
-Best of breedmight be better (than single ERP package)
-Can't meet all needs (i.e., developed for many user types)
Event Driven Architecture (EDA):
An approach to designing and building an enterprise system in which business events trigger actions between independent software modules that are unaware of each other.
1. Each business event is handled individually. This means that busines events are processed in a more timely manner.
2. The business unit that has an event then "pushes" the data about the event to the next unit, rather than waiting for that unit to request or "pull" the information.
3. All related parties or units are informed of the business event simultaneously as it happens.
4. The meaning and attributes of each event is documented and shared across multiple processes in the system.
5. Notifications of events are managed in a systematic way to ensure that the data about the event is sent to right place at the right time.
Enterprise Systems
This chapter explores enterprise systems and ERP systems (defined below) and discusses the advantages which can accrue from these types of integrated systems (as well as, though to a lesser extent, the cons). Several business processes are described in terms of an integrated enterprise system, and several SAP examples are given.
Components of Enterprise Systems:
Enterprise Systems Value Chain:
Event Based Data Capture:
Basic Database Terminology:
ERP Modules:
(What does SAP call modules today, lets update the terminology); Check out other ERP vendor modules also.Five core modules in a typical ERP are below. Each implements one or more business processes.
ES/ERP Pros:
ES:-Single Database
-Integrated System
-Process orientation
-Standarization of business processes
-Faster business process,real time
-Timely information
-Improved financial management
-Improved productivity
-Better financial disclosure
-Improved budgeting, forecasting and decision management
-Seamless integration
-Catalyst for change, business process reengineering
ERP:
-One package
-Modular structure
-Little or no development
-Configurable
-Reduced errors
ES/ERP Cons:
ES:-Centralized control vs. decentralized empowerment
-Inability to support traditional business processes that may be best practices for that organization
-Loss of flexibility in rapidly adapting to desired new business processes in the post-implementation period
-Increased complexity of maintaining security, control, and access permissions for specific information embedded in central database.
The rigidity of "standardization" can impede creative thinking related to ongoing business process improvements
ERP:
-Complex & inflexible
-Implementation horror stories
-Best practices are shared by all who buy
-Difficult to configure
-Long implementation
-Best of breedmight be better (than single ERP package)
-Can't meet all needs (i.e., developed for many user types)
Event Driven Architecture (EDA):
An approach to designing and building an enterprise system in which business events trigger actions between independent software modules that are unaware of each other.1. Each business event is handled individually. This means that busines events are processed in a more timely manner.
2. The business unit that has an event then "pushes" the data about the event to the next unit, rather than waiting for that unit to request or "pull" the information.
3. All related parties or units are informed of the business event simultaneously as it happens.
4. The meaning and attributes of each event is documented and shared across multiple processes in the system.
5. Notifications of events are managed in a systematic way to ensure that the data about the event is sent to right place at the right time.